Executives of two jewelry chains, confident about business prospects, discuss their plans for new stores
Two of the nation’s largest retail jewelry chains plan significant expansions this year.
Helzberg Diamond Shops of North Kansas City, Mo., and Barry’s Jewelers of Monrovia, Cal., are among retailers who are bullish about business. They will demonstrate their confidence by opening new stores, some in new markets, and by focusing on superstores.
The two major goals at Helzberg Diamond Shops this year are increasing the number of its Jewelry3 superstores and boosting the per-store sales average.
In early February, Helzberg had 166 stores, including 26 superstores. By the end of the year, it plans to have 191 stores, including 34 superstores. Two regions are targeted for growth:
Philadelphia. Helzberg plans to enter this region for the first time with eight Jewelry3 superstores. The first was scheduled to open in March near the Court and Plaza at King of Prussia, the second largest U.S. mall in terms of retail space.
Chicago. The company plans to increase the number of stores in this region from 10 to 21 this year.
Why so many stores in these areas at once? “Some people take several years, but I don’t like to make a career of opening stores in a market,” says Jeffrey W. Comment, chairman and chief executive officer.
Comment also doesn’t like to mix store concepts. That’s why the Philadelphia area will see only Jewelry3 superstores and no regular Helzberg Diamond Shops. “We won’t mix [store concepts] in the same market because then you’re competing with yourself,” he says with a chuckle. “I get a lot more fun out of competing with our competitors.”
Store average: In addition to increasing the number of stores, Helzberg wants to increase its sales average. In February, that stood at about $2.1 million per store (up from about $900,000 a decade ago when Comment joined Helzberg after serving as president of John Wanamaker, the Philadelphia department store chain). “Next year, we expect to average $2.5 million and after that aim at $3 million,” he says.
How will they accomplish this? The secret of success, says Comment, is “knowing who we are and who we want to be, understanding our customers and focusing on a half dozen core business issues, such as people, product, pricing and marketing.”
He says Helzberg management empowers employees to contribute to the company’s success. “Over the past 10 years, some of the best ideas have come from our people,” he says. “They know we are interested and that we take care of them.”
Opportunities: In spring 1995, Helzberg merged with Berkshire Hathaway Inc., owned by billionaire investor Warren Buffett and best known for its investment in high-value businesses. Berkshire Hathaway also owns Borsheim’s Inc., a leading independent retail jeweler in Omaha, Neb.
The acquisition hasn’t changed Helzberg operations or strategy, and there are no plans for any joint ventures with Borsheim’s, says Comment.
What the merger does create is the financial strength for careful development of a company’s potential. “It’s a wonderful relationship,” says Comment, “but we haven’t used it in a big way yet.” In fact, two or three acquisition opportunities have been turned down because they didn’t fit the jeweler’s well-defined growth strategy.
Barry’s Jewelers will launch an aggressive three-year growth plan June 1, the start of its fiscal 1997.
The company plans to increase its number of stores from 164 now to 215 by the year 2000 and to convert 15 to 20 of its existing mall stores to superstores (about a third of the stores would then be superstores). Barry’s also plans to remodel 45 stores this year.
This ends a period of intentionally flat growth since late 1994, when Barry’s – just emerging from bankruptcy restructuring – eschewed new store growth in favor of converting existing stores to mall superstores.
A new financing agreement with the Bank of Boston (effective Dec. 31) gives Barry’s up to $100 million in credit. President Thomas S. Liston says this enables Barry’s to “make far better use of its assets, significantly lower interest burden and gain the means to more vigorously pursue its growth strategies, whether through internal expansion or acquisition.”
Superstores and marketing: All of Barry’s superstores are in malls, and most were converted from regular Barry’s stores. The superstores carry 50%-60% more inventory and allow for a broader selection. While a traditional Barry’s store may have five or six 1/2-ct. diamond solitaires, for example, a superstore will have 15-20. Superstores also carry more gemstones and gold fashion jewelry.
As part of its growth policy, Barry’s also plans to market more aggressively by expanding its value-pricing strategy. Special ticketing, displays and programs will focus on the “super value” of key merchandise. In addition, the company has almost doubled the amount of competitively priced, fashion-forward jewelry it carries.
Acquisitions: In addition to growth through new stores, Barry’s is interested in acquisitions. “We’re looking at small to medium-sized store chains, especially in the Midwest and Southwest,” says Robert W. Bridel, chief operating officer. The company already has had discussions with some small unidentified chains, but Bridel says no acquisitions are pending.
In related news, Bridel says the board of directors was expected to confirm Liston as president and himself as chief operating officer sometime this spring. The two have been acting president and acting COO since Terry Burman resigned the presidency in September to become the boss of Sterling Inc.